Illinois Department of Revenue Collects $240 Million Through its Tax Amnesty Program

Illinois Department of Revenue Collects $240 Million Through its Tax Amnesty Program

ILLINOIS (IRN) — The Illinois Department of Revenue announced it collected nearly $240 million through a tax amnesty program, but similar programs in the future could yield diminishing returns, according to a public finance economist.

The state’s amnesty program allowed taxpayers to pay off any outstanding state tax liability and have penalties and interest forgiven. The program ended in mid-November 2019. Officials with the Illinois Department of Revenue said they expect to verify tens of millions of dollars more toward unpaid liabilities. As of Jan. 31, the department had verified $237,090,718 in qualified amnesty payments from 63,006 taxpayers.

Gov. J.B. Pritzker proposed the amnesty program as part of last year’s budget. The Office of Management and Budget initially estimated the program would recover $175 million in outstanding tax liabilities.

“The Tax Amnesty program proved to be successful, and we are pleased so many taxpayers took the opportunity to come into compliance and earn a clean slate with the state of Illinois,” Acting IDOR Director David Harris said in a statement. “[The] announcement is further evidence that Governor Pritzker crafted a financially responsible balanced budget … By encouraging taxpayers with liabilities to pay what they owe, we build trust in the system while raising revenues the state can use to invest in our future.”

Not everyone is as optimistic about the return.

Justin Ross, co-author of a 2012 study titled “Fast Money? The Contribution of State Tax Amnesties to Public Revenue Systems” said it was a relatively meager amount.

“I believe $240 million is the headline? On a $48 billion budget, that is about a half of 1 percent,” Ross said. “Just by that, you can’t make any meaningful contribution to a state’s fiscal situation.”

Ross, an associate professor at Indiana University, said some states use amnesty programs in an effort to keep tax cases out of the courtroom.

“Some states will outsource this and hire a collection agency, who will get a small cut,” he said. “To some extent, it may be a cheaper way of collecting what they were going to get.”

This is the fifth time Illinois has offered a tax amnesty program. Ross said it is possible taxpayers will just wait to pay until the next program is offered.

“We are not certain that this adjusts business planning as individuals wait for the next amnesty program,” he said. “What is certain is that it does not increase compliance.”

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